Sobha Realty launches $300m debut sukuk

Sobha Realty, one of the region’s largest real estate developers, has achieved several remarkable milestones with the successful issuance of its debut $300 million 5NC3 sukuk.

The pricing of this groundbreaking Islamic issuance, which includes a call feature, the first of its kind for a GCC sub investment grade benchmark-sized sukuk, marks a significant achievement for Sobha Realty and the entire industry at large, said the company in a statement.

The five-year sukuk non-callable for three years launched at a yield of 8.75 per cent, the lower end of initial guidance earlier on Monday of 8.75-8.875 per cent, after drawing final orders of more than $525 million, the document from one of the arranging banks said.

Dubai Islamic Bank, Emirates NBD Capital, Mashreq and Standard Chartered are joint global coordinators, and Sharjah Islamic Bank joins them as joint lead manager.

Demand excluded interest from joint lead managers, and earlier peaked at more than $600 million.

Also, the region’s dominant real estate developer becomes only the second regional, High Yield Real Estate issuer to enter the public capital markets in the last several months, once again highlighting the continued demand strength for leading real estate issuers.

These accomplishments highlight Sobha's commitment to exploring innovative financing options and expanding its presence in the global capital markets, it stated.

Sobha Realty is mainly active in Dubai's real estate market, where it had an 8 per cent market share in the first quarter, according to a presentation on its website.

Sobha Realty reported sales of Dh10.82 billion and revenues of Dh5.55 billion last year, up from Dh4.38 billion and Dh3.17 billion respectively in 2021.

As of March 30, the firm had Dh180 million of debt maturing this year, Dh171 million next year, Dh1.34 billion due in 2025 and Dh106 million due in 2026, the presentation showed.

Its net debt to operating EBITDA ratio was 0.9 in 2022 from 3.3 in 2021 and 13.5 in 2020.